Boston Beer Insider Sales Suggest Fading Cool Factor

By Grace L. Williams

Boston Beer Co.

Mmm…beer

While a lot of focus has been on special dividends and market movers lately, we haven’t lost sight of insider sales. In notable recent action the chairman and founder of Boston Beer Co. (SAM), along with several other insiders, has been draining the proverbial keg in a selloff that has at least one analyst taking interest and questioning the lasting hipness of the brand.

James Koch launched Boston Beer, which makes several beverages including Samuel Adams beer, in 1984 and brought the concept of craft beer and microbrews to the mainstream. Between Nov. 13 and 30, he sold about 96,000 Class A shares of the company for close to $11 million.

On Nov. 1, Boston Beer reported profit of $ $1.53 a share on revenue of $166.4 million. Analysts were expecting $1.35 a share profit on revenue of $154 million, according to Thomson Reuters.

Jonathan Moreland of InsiderInsights said that the selling may signal executives at the brewer see trouble ahead. As craft beer and microbrews bubble up in popularity and home brewing kits saturate the market, the popularity of Sam Adams is being tested.

“The liquor business is a matter of trying to get that image and trying to stay cool,” says Moreland. “There is a lot of competition out there coming from untraditional sources, including alternatives to beer, and Samuel Adams is not particularly a hipster microbrew.”

Boston Beer is down from its all-time high of $128.07 on July 5, trading at about $113. Shares have hovered at around that level since Koch began selling in November, going as high as $115.49 on Nov. 26.

Koch wasn’t alone in his selling: William Ulrich, the company’s CFO, exercised options and sold 10,000 shares for $1.16 million, and Kathleen Wade, VP of legal and secretary, exercised options and sold 3,100 shares for $356,500.

“If and when Boston Beer lowers guidance, folks shouldn’t claim the sales made [by insiders] were unethical,” says Moreland. “This is another great example of how following insider activity can help you avoid potential pitfalls.”

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